2006 or 2007 income?

[Questionguy101]

The rent of a tenant was due on December 29, 2006. The tenant had the rent ready to be picked up by the landlord on that day (12/29/2006). But the landlord was busy and he didn't pick up the rent until January 2 2007.

Is the rent payment considered 2006 or 2007 income of the landlord?

[Bird Legs]

Rental Income 2006 or 2007

I would say 2007 since client did not have the check. If the check had been mailed to him
and he received it but not deposited it in 2006 then it would still be 2006 income.
In this instance, however, your client did not have physical possession of the check in 2006.
This is just my thick skulled, incoherent thinking.

[veritas]

I'm going to

take the opposite tack. If the mail was delivered to a mailbox on 12-31 and he was to busy to go get it. Would it not be income in 2006?

[jainen]

constructive receipt

>>the landlord was busy and he didn't pick up the rent <<

If it was due and available on the 29th but the landlord chose not to take it, he can not escape the constructive receipt rules.

[BOB W]

According.......

........ to the IRS, he has constructive receipt and must be reported as 2006 income. Constructive receipt is very broad. You should goggle it.

But I don't know of anyone that would report it in 2006, they would report in 2007.

[jainen]

handled correctly

>>But I don't know of anyone that would report it in 2006<<

My clients would report it in 2006. Under Circular 230 you are required to consider the implications of the information a client provides. I reconcile what they say is the monthly rent with what they report annually, so a discrepancy like this would be handled correctly.

[BOB W]

:d

>>But I don't know of anyone that would report it in 2006<<

My clients would report it in 2006. Under Circular 230 you are required to consider the implications of the information a client provides. I reconcile what they say is the monthly rent with what they report annually, so a discrepancy like this would be handled correctly.

COOL ......................... Now I know someone...........

[BOB W]

Here it is....

....."(a) General rule. Income although not actually reduced to a taxpayer's possession is constructively received by him/her in the taxable year during which it is credited to his/her account, set apart for him/her, or otherwise made available so that he or she may draw upon it at any time, or so that he/she could have drawn upon it during that taxable year if notice intention to withdraw had been given. However, income is not constructively received if the taxpayer's control of its receipt is subject to substantial limitations or restrictions." Treas. Reg. § 1.451-2(a).

[ChEAr$]

Her'es my three cents worth

All leases I'm familiar with dictate that lessee is obliged to deliver the check to the
lessor (landlord) at a certain address by a certain day. Just because landlord
by custom comes by for the check doesn't mean he has income on the 29th.
Look to the lease.

AS a corollary, my client last Friday caught me at office and wanted me to do his two
employees' W2's. Well, no problem, so he sent the information over and I filed them
online with Social security administration, printed out the copies in about an hour and
made out his bill. He called to see if ready and asked how much he owed me. I said
the bill would be with the form when his daughter came to get them, howEVER.....
he could make out my check and mail it on Saturday in order that he get his tax
deduction for 2006.
Need I say more? (grin)
and BTW, his check arrive in today's mail